unit three Flashcards
what is absolute advantage
When an economy can produce a greater
total of goods with the same quantity of inputs, they should specialise in the production of this good or service
eg uk and finance
what is comparative advantage
This is when a country has an advantage in all products or services. Countries should still specialise in what ever has the least opportunity cost
what are some of the top uk exports
- Cars
- oil and gas
- food/drink
- technology
what are some of the top uk imports
- Cars
- Oil and gas
- pharmaceuticals
- Spirits (whisky)
what are the pros and cons of global trade
pros
- Stimulates economic growth
- increases competition - high quality goods -increases employment
- more variety of goods and services
- free trade allows for cheaper goods as there are no trade barriers
cons
- - negitive environmental impact
- decreases local employment
what are the pros and cons of globalisation
why do some contries have comparative advantage
- natural resources - oil and gas, timber
- Climate advantages - food production
- Skilled workforce - UK finance
what is a trade barrier
trade barriers are ways which trade between two
countries may be restricted. This is normally due to measures to reduce the number of imports into a country
what are the types of trade barriers
tariff- a tax or duty on an import to make it more
expensive
quota - a physical restriction on the number of goods entering a country
embargo - a complete ban on trade with a country or a specific product
Subsidies - when the gov gives money to a company to help them reduce the cost a production -cheaper goods
favouring - government may choose domestic businesses when awarding contracts for public sector project
what are the pros and cons of trade barriers
PROS
- to protect jobs
- to protect infant industries
- to prevent dumping
- for political reasons. eg russia -war
- health and safety reasons
CONS
- restricts consumer choice
- obstructs free trade
why may multinationals locate in the UK
- high education rates - skilled workers
- political stability
- english speaking - language of business
- good infrastructure
why may UK multinationals locate elsewhere in the world
- lower wages
- lower tax rates
- abundance of cheap land
- government subsidies or grants
- Less likely to have powerful trade unions
- large population
what are the pros and cons of becoming a multinational for a firm
pros
- increased market -> increased sales
- take advantage of economies of scale
- Cheaper staff
- grants from countries government
- becomes larger-safety from takeovers
- spreads risks between countries
cons
- Legislation in each country -expensive
- cultural differences - includes working hours (spain) etc
- Languages - costs of translators
what are the pros and cons of multinationals
PROS
- creates jobs
- increases tax revenue for government
- increases the number of skilled workers through training
CONS
- too much influence on the gov
- profits could return to the home country of the maltinational
- footloose in nature
• uses up natural resources
- Senior jobs may not be given to national people
what is the definition of an exchange rate
the exchange rate is the rate at which one currency trades against another on the foreign exchange market
what are the factors that influence the exchange rate
increase in supply and fall in demand -> exchange rate falls
decrease in supply and increase in demand -> exchange rate rises
- Interest rates
- Inflation
- speculation
- supply/ demand
- Imports/exports
- tourism
what is the current account
what is the capital/financial account
what is a developing country and its features
large group of poor countries in Asia, Africa and latin america. Also called (LDCs) Less developed countries.
- poverty
- high population growth
- high dependence on imports
- dependence on agriculture
- underemployment
- Lack of infrastructure
- low standard of living
what is a developed country and its features
group of rich, industrialised nations in western Europe, north america, australasia and Japan. Also Known as more developed countries (MDCS)
- low poverty
- lower population growth
- lower dependence on imports
- relatively high employment rates
- lots of infrastructure
- high education rates
- high standard of living
what is an emerging economy and its features
emerging economies the group of countries that is neither developed or developing. They are countries that are becoming larger fast and have qualities like developed and developing economies.
They are sometimes known as BRICS
(brazil, russia, india, china and south Africa)
- high economic growth
- rising export sales
- little reliance on agriculture
- increasing standard of living
- increasing levels of education
- improving infrastructure
what are some motives for international aid
- humanitarian
- Political
- economic
what are the pros and cons of international aid
PROS
- it may not reach those in need due to corruption
- there may be new capital spending but no currents spending
- countries can become dependent on foreign aid
- food aid can destroy local farming
CONS
- reduces poverty
- reduces social in equalities
- helps to improve or build relationships between countries
what are some types of foreign aid
- loans
- gifts (food, mectical cic etc)
- grants
- writing off debt
